Financial Plight Is No Justified Reason For Non-Remittance Of Employees' Contribution To National Pension Scheme: Kerala HC

While highlighting that Corporation inheres no right to meet its financial obligation by utilizing the employees' contribution to the National Pension Scheme, the Kerala High Court ruled that even if the financial plight propounded by the Corporation is liable to be considered, the same could not provide any justifiable ground for non-remittance of the employees' contribution to the National Pension Scheme.

The High Court held so while considering an appeal challenging the order of the Single Judge in W.P(C)No.33790/2022, whereby the appellants (KSRTC) were directed to remit the employees' and employer's contribution to the National Pension Scheme and the contribution to State Life Insurance Policy and Group Insurance Accounts to the respective heads.

While upholding the decision of the Single Judge, the Division Bench of Justice Alexander Thomas and Justice C. Jayachandran observed that “once such deductions are affected, the Corporation is statutorily bound to remit the same to the Contributory Pension Scheme. Non-remittance of the said funds, after effecting the deduction, could obviously indicate diversion of the same for some other purposes of the Corporation, which action can hardly be justified”.

Advocate Dipu Thankan appeared for the Petitioner, whereas Advocate T.R.S Kumar appeared for the Respondent.

After considering the submission, the Bench found that the Single Judge has observed in his order that there was no justification in not remitting the amounts to the National Pension Scheme, once the employees' contribution to the same has been deducted from their salary.

Considering that the National Pension Scheme contemplates an arrangement for delayed payment of contribution, after deduction from the salary, together with interest at the stipulated rate, the Bench refused to interfere in the order of the Single Judge.

Therefore, “the fact that the appellant-Corporation had affected deduction from the salary of the employees' towards their contribution to the National Pension Scheme, the non-remittance of which could not be justified on any legal premise”, concluded the Bench.

The Bench also made it clear that the provision in the National Pension Scheme mulcting the liability to pay interest on the belated payment of the employees' contribution, will not be of any aid to the appellant, since the Corporation, which is stated to be in financial doldrums, will have to shoulder a larger financial responsibility while effecting payment together with interest.

Such a ground cannot be pressed into service to wriggle out of a statutory obligation, especially when the employees' contribution is admitted to have been deducted, added the Bench.

Cause Title: Managing Director, KSRTC and Anr. v. S. Suneesh Kumar and Ors. [Neutral Citation Number :2023: KER: 47165]

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